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  1. #1
    Join Date
    Feb 2009

    Default Mortgage Involving a Life Estate

    My question involves real estate located in the State of: North Dakota

    In 1997 mom and dad did a quit claim deed for farm land where they were the grantors giving a life estate interest to themselves and remainder interest to myself, my sister and my brother (grantees). Dad died in 2004. Mom does not live on the farm, but rents it out and receives all proceeds from the rent as well as pays the taxes and insurance.

    My question is, can mom take out a mortgage on the property? Can any of the grantees take out a mortgage on the property? If so, what signatures/approvals are needed, if any?

  2. #2
    Join Date
    Sep 2005
    Behind a Desk

    Default Re: Mortgage Involving a Life Estate

    With a life estate, getting a mortgage becomes complicated. Typically with an existing mortgage, the life tenant is responsible for payment of interest and the remaindermen are responsible for payment of the portion that goes to the principal balance.

    The issue for getting a new mortgage is that the lender doesn't want to be left high and dry. While your mother is alive, the remainder interest in the property typically has little market value. But without knowing how long she'll live, a mortgage lender is going to be very wary of lending just to her without clear recourse against the remaindermen. That's a roundabout way of saying, the mortgage lender will probably want everybody involved to join the mortgage, or at least to sign releases such that they can't object to a foreclosure in the event of nonpayment.

    If you want to know what any specific lender will require, you have to ask that lender.

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